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HMRC internal manual

Capital Allowances Manual

Plant and Machinery Allowances (PMA): cars: expenditure incurred before 1 or 6 April 2009 - employments and offices

CAA01/S36 & CAA01/S80

Expenditure by employees or office holders on road vehicles or cycles does not qualify for PMAs for 2002-03 onwards. However, up to 2001/02, an employee or office holder who buys a car, other road vehicle or a cycle has the choice of claiming capital allowances or taking part in the Fixed Car Profit Scheme. If the employee takes part in the Fixed Car Profit Scheme for a chargeable period the employee may not claim capital allowances for that chargeable period. The employee does not need to satisfy the necessarily condition (CA20015) to claim capital allowances on a car, other road vehicle or cycle.

If an employee or office holder has taken part in the Fixed Car Profit Scheme for some years but not others this is how you should calculate any balancing allowance:

  • Deduct the disposal proceeds from the balance in the pool for that car;
  • Multiply the result by the number of chargeable periods for which the employee has claimed capital allowances divided by the number of chargeable periods for which the employee could have claimed capital allowances;
  • The answer is the balancing allowance.